FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

What is the free cash flow? 

Apex Company prepared the statement of cash flows for the current year that is shown below: Apex Company Statement of Cash Flows–Indirect Method Operating activities: Net income $ 40,300 Adjustments to convert net income to cash basis: Depreciation $ 21,300 (60,600) (26,800) 9,900 54,600 (11,400) 4,300 Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable (8,700) 31,600 Net cash provided by (used in) operating activities Investing activities: Proceeds from the sale of equipment Loan to Thomas Company Additions to plant and equipment Net cash provided by (used in) investing activities Financing activities: Increase in bonds payable 15,000 (40,600) (120,500) (146,100) 88,700 38,400 (29,900) Increase in common stock Cash dividends Net cash provided by (used in) financing activities Net decrease in cash and cash equivalents Beginning cash and cash equivalents 97,200 (17,300) 28,100 Ending cash and cash equivalents $ 10,800 Required: Compute Apex Company's free cash flow for the current year. (Negative amount should be indicated by a minus sign.) Free Cash Flow = ?
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Transcribed Image Text:Apex Company prepared the statement of cash flows for the current year that is shown below: Apex Company Statement of Cash Flows–Indirect Method Operating activities: Net income $ 40,300 Adjustments to convert net income to cash basis: Depreciation $ 21,300 (60,600) (26,800) 9,900 54,600 (11,400) 4,300 Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable (8,700) 31,600 Net cash provided by (used in) operating activities Investing activities: Proceeds from the sale of equipment Loan to Thomas Company Additions to plant and equipment Net cash provided by (used in) investing activities Financing activities: Increase in bonds payable 15,000 (40,600) (120,500) (146,100) 88,700 38,400 (29,900) Increase in common stock Cash dividends Net cash provided by (used in) financing activities Net decrease in cash and cash equivalents Beginning cash and cash equivalents 97,200 (17,300) 28,100 Ending cash and cash equivalents $ 10,800 Required: Compute Apex Company's free cash flow for the current year. (Negative amount should be indicated by a minus sign.) Free Cash Flow = ?
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